One of the state's largest banks will be receiving Treasury Department funds as part of a massive attempt to thaw U.S. credit markets and increase lending.
It's unclear how much money National Bank of Arizona will receive, but it will get part of a $1.4 billion infusion approved for its parent company, Salt Lake City-based Zions Bancorp, which runs banks across the West.
"They have chosen healthy banks to spur investment and rejuvenate the economy," said Dave Lyons, National Bank of Arizona's regional president. "I think the market has bottomed, and there are certainly opportunities here."
Essentially, in the hope of stimulating lending, the Treasury Department has poured $250 billion into some of the nation's banks through company stock purchases. Lyons said Zions Bancorp will have to pay 5 percent interest on the money annually as well.
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In a news release, National Bank of Arizona officials said the Treasury Department funds would be used to expand lending, make acquisitions and address nonperforming assets, which are 90 days past delinquent.
But Lyons said the focus would mostly be on expanding lending, particularly in the commercial sector.
"Traditionally our bank has worked with locally owned businesses, and businesses that are Arizona-based," Lyons said. "Our focus has been on local companies where we have a relationship with the owners of the businesses and meet with the principals of the firms."
A recent quarterly bank-ratings report by BauerFinancial, a leading banking industry analyst, said about 3.7 percent of National Bank of Arizona's assets were found to be nonperforming.
When delinquencies reach 2 or 3 percent, investors and regulators can start to be concerned. But Lyons said National Bank of Arizona is healthy and has been "aggressive" in identifying troubled assets. The bank steered clear of subprime loans and a large portion of the delinquencies are tied to development loans, he said.
The infusion of Treasury Department funds into the banking system will ultimately be good for the national and local economy and is necessary, University of Arizona economist Marshall Vest said.
"It's important to the economy and important to bank customers," Vest said. "The economy floats on a sea of credit. If credit is frozen, the economy suffers."
Vest said whatever amount trickles down from Zions to National Bank of Arizona "is really good for the economy locally."
Did You Know
National Bank of Arizona is the state's fourth-largest bank with nearly $6 billion in assets and was founded in Tucson in 1984. It has 78 branches across the state, five of which are in the greater Tucson area. The local branches are:
• 136 N. Stone Ave.
• 3611 N. Campbell Ave.
• 335 N. Wilmot Road
• 7601 N. Oracle Road
• 2120 W. Ina Road